Due to the ever-changing nature of interest rates it is almost impossible to keep a web site current. For example, a client may visit the site at 12:00 PM only to call at 2:00 PM and find that the rates have changed. Therefore, we prefer you contact us for a more accurate and expedient method in relaying current interest rates to our prospective clients.  

          MORE RATE INFO           

• The Law REQUIRES ALL LENDERS TO QUOTE "APR", not interest rate. It is almost impossible to quote APR (annual percentage rate) without discussing the exact details of your specific transaction with you. If you have less than 20% down or equity, make sure they include PMI in the APR (as required by law).

• Due to the instability of the financial markets, interest rates are subject to change without notice. Sometime two or more times in one business day! Any rate posted at 10:00 AM may no longer be available at 11:00 AM.

• Interest rate may vary depending upon your unique credit history and the transaction, plus you may not qualify for the desired rate or program.

• Most online rate quotes "assume" a 20% down payment, and a 30-day lock. This may not fit your needs, and could easily distort your rate shopping.

• Most online rate quotes are for loan amounts over $185,000. - If your loan amount is lower, your rate will probably be higher.

• While rate is important, you have to look at the overall cost of your loan. (Click HERE for REAL closing cost information) This includes looking at the APR, the loan fees, as well as the discount points and origination fees. Some lenders include origination in their quotes, while other lenders add origination in addition to their quoted points. So when one lenders says 2 points they mean 2 points, whereas another lender means 2 points plus 1% origination. Some lenders quote "lender fees plus prepaids" when you ask about closing costs, where other lenders quote every penny required to complete the transaction.  The quoted difference can APPEAR to be thousands of dollars, when in reality, it is not. Be sure to read "Beware of the BAD Good Faith Estimate" so you don't get taken by misleading information.

• The cost/rate of the mortgage, however, cannot be your only criteria. There is no substitute for asking family and friends for referrals and for interviewing prospective mortgage companies. You must also feel comfortable that the loan officer you are dealing with is committed to your best interests and will deliver what he/she promises! That the company knows how to do Minnesota loans, and that the loan will actually close. Communication with your loan officer is too important to let a "lowest rate" quote on the Internet make your lender decision. CLICK HERE to see our Commitment To You.

• Avoid Internet Lenders and Stick with a Local Company!

In order to receive a guaranteed rate, an full application must be submitted and an agreement must be signed by you officially locking the rate. An oral agreement to make a loan at a certain interest rate or number of points is NOT valid or binding until accepted and executed in writing by both parties. Down payment may vary depending upon programs. Any statement of current loan terms and conditions provided by us is not an offer to enter into a loan of a specific interest rate, or points or both, as you may or may not qualify. Any such offer may only be made pursuant to Minnesota Statutes Section 47.206. Disclosure of discount "points" is separate from standard origination fees. Any origination fee is included in the APR. If the down payment is less than 20%, mortgage insurance may be needed which could increase the APR. Rates subject to change at anytime without notice.

FED RATE CUTS DO NOT EQUAL LOWER FIXED RATES 

So the Federal Reserve cut rates again. Many mortgage applicants will be calling their Loan Officer and expecting a lower interest rate, especially those currently in process with a loan. Others who have been waiting to refinance are puzzled as to why FIXED mortgage rates have not really moved lower. In fact, FIXED mortgage rates are now almost exactly where they were before the Fed began cutting rates. This is difficult to explain to many consumers who have watched a reduction by the Fed with no benefit in mortgage rates.

Is a Fed rate cut really good news for mortgage rates? The facts may be surprising. The Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30-years, a rate that is set by the Fed can change from one day to another.

Another common mistake is in thinking that 30-year Treasury bonds or 10-year Treasury notes are directly pegged to mortgage rates.

Those are government securities that are backed by the full faith and credit of the U.S. government and have no direct effect on mortgage rates.

So what are mortgage rates based on? As it turns out the answer is mortgage-backed bonds known as Mortgage Backed Securities (MBS). Bonds issued by Fannie Mae and Freddie Mac (MBS) and the trading performance of those bonds will determine the direction of mortgage rates. Finding the catalyst that causes mortgage bonds to move will give you the keys to finding out what makes mortgage rates rise or fall.

We know that inflation will always be a negative for any long-term bond because it eats away at the future returns. Since the bond will pay a set amount over a long period of time, that amount will be less valuable if inflation is high. Over the past several years, one catalyst that seems to be working in the opposite direction of MBS prices is the Nasdaq and broader stock market.

As bond prices rise, interest rates fall. As bond prices fall, interest rates rise. The consistency of this behavior is astounding.

As the Nasdaq moves higher, bond prices move lower causing interest rates to rise. As the Nasdaq declines, mortgage bonds benefit, causing mortgage rates to fall. Additionally, and unlike common opinion, Fed rate cuts have had virtually no direct effect on mortgage rates. Moreover, it appears that since Fed rate cuts act to stimulate the Nasdaq, they have a negative effect on mortgage rates.

The bottom line is that it appears mortgage rates will get better if the Nasdaq sells off and will get worse if the Nasdaq rallies. So it is not necessarily what the Fed does that affects mortgage rates, it's how the Nasdaq and broader stock market interprets the Fed's action that will ultimately influence the direction of mortgage rates. This is because money managers and mutual fund companies typically keep funds in either stocks or bonds with very little in cash. If stocks are in favor, money is pulled from bonds, causing bond prices to drop and interest rates to rise. When stocks are being sold off, the money is then parked into bonds, which improves bond prices and causes interest rates to decline.

A closer look at the 3 rate cuts by the Fed  in 2007 shows that mortgage bond prices deteriorated after each Fed rate cut. This means that mortgage rates rose after the Fed had cut rates while many consumers were expecting their mortgage rates to decline. Worse yet are the consumers who missed the opportunity to obtain a lower rate because they mistakenly waited for the anticipated Fed action to cut short-term rates, thinking that longer-term mortgage rates would decline as a result.

Predicting the future is tough, so nothing is written in stone. Keep an eye on the Nasdaq, and keep in mind that the best rates may be behind us. But, mortgage rates are still low and could have some quick dips so make the most of them while they last.

The bottom line? Make sure you are working with an experienced, professional loan officer. The largest financial transaction of your life is far too important to place into the hands of someone who just quotes rates, but is not capable of advising you properly and troubleshooting the issues that may arise along the way. More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life but we do this every single day. It's your home and your future. It's our profession and our passion. We're ready to work for your best interest. 

RATES ARE GREAT. Don't gamble on it moving any lower. Act Now!

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DID YOU KNOW?

The Good Faith Estimate is NOT a Guaranteed List of Closing Costs!  It is only as accurate or valid as the lender chooses to make it.

Good lender = Good "Good Faith Estimate". Bad lender = Bad estimate.

Unfortunately, many lenders - especially those you find on the Internet, PURPOSELY quote low to capture your attention with no intention of ever actually honoring their quote.

RESPA, (The Real Estate Settlement And Procedures Act) the law governing the Good Faith Estimate officially states "It is only an estimate or range of charges. For example, the lender may not know the costs for a settlement agent that you choose, or the exact amount that will be collected for an escrow account for taxes and insurance."

Furthermore, if your costs are HIGHER at closing than you expected, RESPA officially states that the law does not give a consumer the right to sue if the lender charges more. They only say "The best protection is to let the lender and settlement agent know that you will want to see the HUD-1 Settlement Statement one day in advance. You should question any amount that you do not understand."

Visit HUD's estimate info web site to learn more - but remember, we give you a written GUARANTEE that our estimates are real, and accurate. This is also why our estimate will almost never be the lowest one you see!

See you at the closing table!
 

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Joe Metzler, MMS, UMB Senior Mortgage Banker 971 Sibley Memorial Hwy (Hwy 13) Saint Paul, MN 55118 Phone (651) 552-3681 Map Cell (651) 592-4460 Fax (651) 994-6425

Equal Housing Lender - Our services available only for properties located in Minnesota, Wisconsin, and Florida. PLEASE DO NOT KEEP US A SECRET from your FRIENDS. Licensed as Great Rivers Mortgage, LLC and Mortgages Unlimited, Inc. As a Lenders One partner, we are part of the 9th Largest Retail Mortgage Originators in the country. We were recently ranked as 8th largest in Minnesota, by Minneapolis/St. Paul Business Journal. Any use or duplication of any materials is  strictly prohibited.  All images, text, and materials Copyright © 1998-2008. Metzler Enterprises, LLC. All Rights Reserved.

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